Analyst Note| Kevin Brown |
While Pebblebrook saw another quarter of negative EBITDA, the third-quarter results were slightly ahead of our estimates. Therefore, we don't plan to make any material changes to our $20 fair value estimate for the no-moat company. Occupancy for Pebblebrook's upper upscale portfolio remains very low at 19.5%, down from 87.5% in the third quarter of 2019 though that is an improvement over the 3.3% figure reported in the second quarter of 2020. Average daily rate also declined 17.8%, which led to revenue per available room falling 81.6% year over year that was in line with our 81.4% decline estimate. Where Pebblebrook outperformed our estimates was on the expenses side as same-store operating expenses fell 63.2%. As a result, same-store EBITDA was a $19.2 million shortfall, better than our estimate of a $58.7 million loss in the quarter. Therefore, while an adjusted funds from operations loss of $0.51 is a major decline from a $0.77 gain in the third quarter of 2019, that figure is better than our estimate of a $0.74 loss.